Pressure builds on Turnbull government to abandon Newstart cuts

A former Liberal leader, a prominent comedian and an award-winning novelist are among those who have signed an open letter calling on the federal government to abandon plans to cut unemployment payments.

Thirty-four notable Australians – also including economists, academics and religious leaders – have put their names to the letter urging Prime Minister Malcolm Turnbull to change course on the Newstart benefit. They're also calling on Opposition Leader Bill Shorten and Labor to stand firm against the government's plans.

Prime MInister Malcolm Turnbull can expect pressure for a parliamentary vote from Liberal MPs who support marriage equality if the plebiscite is blocked.Credit:Getty Images

Former Liberal leader John Hewson, comedian Corinne Grant, Miles Franklin Prize-winner Anna Funder, businessman John Menadue and former politicians Carmen Lawrence and Cheryl Kernot have signed the letter.

Other signatories include economist David Morawetz, Uniting Church president Stuart McMillan and respected academics Barbara Pocock, Spencer Zifcak, Frank Stilwell, Marian Baird and John Buchanan.

The government plans to axe a supplement – introduced by Labor – for anyone who applies for Newstart after September 20. But critics say cutting the clean energy supplement will create a two-tiered system in which the newly unemployed will be paid a record low of 32 per cent below the official poverty line.

The $1.4 billion cut was announced in this year's budget, going against the advice even of the Business Council of Australia which had previously argued Newstart "no longer meets a reasonable community standard of adequacy and may now be so low as to represent a barrier to employment".

Accountancy firm KPMG has also called on the government to raise rather than cut the dole, which is claimed by about 725,000 people.

The base Newstart rate for singles is $263.80 – a paltry $37.70 a day. The supplement adds $4.40 a week.

Illustration: Matt Golding.

Labor is internally divided on the cut, which is to be contained in a $6 billion "omnibus" savings bill to be introduced by the government when Parliament resumes this week.

Mr Shorten last week called Newstart inadequate but did not commit to opposing the cut in the Parliament.

The open letter – organised by the Australia Institute think tank – says cutting Newstart is bad economic and social policy.

"A government that plans to give more to the richest Australians while cutting support for people below the poverty line will only further entrench inequality in Australia," the letter says.

A government that plans to give more to the richest Australians while cutting support for people below the poverty line will only further entrench inequality in Australia.

Letter about Newstart to the Prime Minister.

"We urge the prime minister and all political leaders not to cut Newstart."

The institute's director, Ben Oquist, said there was recognition across the political spectrum the cut was a bad idea.

"Unemployment has grown under the last term of government. There is no justification to compound economic pain for some of Australia's poorest," he said.

The supplement was introduced by Labor to compensate households that paid no tax for the impact of the carbon price. The government argues with the carbon price gone the compensation should be cut too.

However the middle class tax cuts associated with the carbon tax are not being touched.

The supplement was the only real increase to Newstart – which goes up with inflation rather than wages growth – since the mid-1990s.

The benefit is now more than $100 a week below the poverty line, which is defined as 50 per cent of median income.Other signatories include former Defence Department boss Paul Barratt, St Vincent de Paul Society CEO John Falzon, UnitingCare boss Martin Cowling and unionists Ged Kearney, Andrew Dettmer and Jeannie Rea.